Last week the court denied a Google motion to terminate or transfer this appeal for lack of jurisdiction. While jurisdictional issues will still be addressed in the parties' briefs, a fair amount of briefing had already been submitted and Google's case for termination or transfer was apparently not found strong and clear enough to warrant an immediate termination or transfer.

It was always clear that Judge James L. Robart's Microsoft v. Motorola FRAND rate-setting opinion would set a key precedent throughout and beyond the United States (this was predictable even before it issued because no one had done this before) and, once everyone was able to see how well-considered and logically-structured it is, that many courts and parties (as well as policymakers and regulators) would find it instructive.

The most obvious third-party beneficiary of this is Apple, which has to deal with very similar conduct on Google's (Motorola's) part as Microsoft. In terms of the standards at issue in the disputes, there's an overlap with respect to IEEE 802.11 (WiFi). In the Apple cases the emphasis is, however, on cellular (ETSI) standards, which aren't relevant to Microsoft, where Motorola mostly focused on the H.264 video codec. I haven't seen Motorola assert H.264 video codec patents against Apple, though it uses this format extensively as well. Now that the low value of Motorola's H.264-related patents (they're mostly about interlaced video, which is -- no kidding -- a technology invented around the year 1940 that has lost relevance in recent decades) has been exposed by a court ruling, it may not even be economically wise for Google to assert those patents against Apple.

Yesterday (Friday) Apple pointed the United States Court of Appeals for the Federal Circuit to Judge Robart's rate-setting opinion in both Motorola FRAND appeals:

In the "Posner appeal", Apple attached the entire opinion to a notice of supplemental authority and explained its bearing on the "Posner case" as follows:

"Apple's Response and Reply Brief ('RRB') argues that the district court properly held that the 'purpose of the FRAND requirements … is to confine the patentee's royalty demand to the value conferred by the patent itself.' RRB 25. Judge Robart concurs, stating that to determine a royalty rate, 'it is critical to consider the contribution of the patented technology apart from the value of the patent as the result of its incorporation into the standard, the latter of which would improperly reward the [declared Standard Essential Patent ('SEP')] owner for the value of the standard itself. Rewarding the SEP owner with any of the value of the standard itself would constitute hold-up value and be contrary to the purpose behind the RAND commitment.' [...]

Apple argues that to value an SEP, the district court properly focused on the cost to obtain a license 'just before the patented invention was declared essential.' RRB 27-28. Judge Robart concurs: 'parties to a hypothetical negotiation under a RAND commitment would consider alternatives that could have been written into the standard instead of the patented technology.' [...] Judge Robart also agrees that licenses negotiated 'under the threat of a potential infringement lawsuit' are not 'reliable indicator[s] of a RAND royalty rate,' as Apple has argued. [...]

Finally, Apple argues that Motorola provided no evidence that it was entitled to a large royalty award for its 'trivial inventions.' RRB 1, 38-41. Consistent with that point, Judge Robart states that a proper FRAND rate must take into account that Motorola's SEPs 'constitute only a sliver of the overall technology incorporated into' the relevant standards. [...]"

The term "trivial inventions" relates to the patents Motorola had declared essential to the standards at issue in the Microsoft case, and Judge Robart actually thought that Motorola's cellular SEP portfolio is (though he didn't analyze it in detail) more powerful than its H.264 and IEEE 802.11 patents. In light of the track record of Motorola's wireless SEPs I'm not sure Apple infringes even a single valid Motorola SEP of that kind, but in general it's certainly correct that Motorola played a greater role in the development of cellular standards than the standards at issue in the Microsoft case. The key thing for Apple's purposes in the "Posner appeal", however, is that the methodology used by Judge Robart is consistent with its positions.

In the "Wisconsin dismissal appeal", Apple filed a motion for an extension of time. The way Apple interprets the rules, its opening brief would normally have been due on June 17, 2013, but the court ordered Apple to file it 21 days after the denial of Google's motion to terminate or transfer, i.e., on May 24, 2013. Apple now requests a 60-day extension of time from that date (to July 23, 2013). Motorola is fine with this extension provided that Apple won't oppose its own request for an equivalent extension, which it may bring in the future and which Apple told Motorola it wouldn't oppose. If both requests are granted, Motorola's initial brief will be due on November 5, 2013 (by coincidence, precisely one year after the dismissal of the Wisconsin trial).

The Federal Circuit usually grants unopposed requests for 60-day extensions. Still, a moving party has to state reasons, and in these big and complex cases this isn't hard. Apple points to the sheer volume of documents at issue and stresses that "[t]Ten separate counts may be relevant to this appeal", only one of which was about rate-setting:

"Notably, Judge Robart of the U.S. District Court for the Western District of Washington recently issued a careful 207-page opinion that addressed just one of the issues presented in this appeal. See Microsoft Corp. v. Motorola, Inc., No. 10-1823-JLR (W.D. Wash. Apr. 25, 2013), Dkt. No. 681 (discussing proper method for computing a FRAND royalty)."

This Federal Circuit appeal isn't going to result directly in a Judge Robart-style rate-setting decision. But this would happen on remand if Apple achieved a reversal of the dismissal.

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About Me

Florian Mueller is an app developer who used to be an award-winning intellectual property activist. His 30 years of software industry expertise span different market segments (games, education, productivity and infrastructure software), diverse business models, and technical and commercial areas of responsibility. In recent years, Florian advised a diversity of clients on the patent wars surrounding mobile devices, and on their economic and technical implications. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof, except that he is long AAPL.) He is now developing games for smartphones and tablet computers.